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Chapter 3 Analyzing Transactions into Debit and Credit Parts
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T- Account Assets = Liabilities + Owners Equity Each account receives a T-Account so that we may analyze the balance of the account
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Analyzing the T-Account
Left Side Right Side Debit Credit Each account will have its own T-account Cash,Supplies,Pre-paid Insurance
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Assets = Liabilities + Owners Equity
Left Side Right Side Left Side Right Side Debit Credit Debit Credit Normal Bal... Normal Bal... + - - + Cash Supplies Prepaid Insurance
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Please work on work together and “ON your own on page 44)
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All companies have a sheet of paper that tell you what all of their accounts are it is called – Chart of Accounts Assets Cash Supplies Prepaid Insurance Accounts Receivable Liabilities Accounts Payable Owners Equity Barbara Trevino, Capital
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4 questions you need to ask….
What two accounts does it effect? What types of accounts are they? How is each account balanced changed? How is each amount entered into the T- Accounts?
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1. Received cash from owner as an investment $10,000
What two accounts does it effect? Cash Barbara Trevino, Capital What types of accounts are they? Asset Owners Equity How is each account balanced changed? Cash Increased Barbara Trevino, Capital increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Received Cash from Owner 10,000 Cash Barbara Trevino, Capital Debit Credit Debit Credit Normal Bal... Normal Bal... + - - + 10,000 10,000 So we say for this transaction we Debit Cash, Credit Capital
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Two major rules we must remember……...
Accounting Equation - Do our assets = our liabilities + our owners Equity???? Do our debits = our credits???
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1. Paid cash for supplies $1,577
What two accounts does it effect? Cash Supplies What types of accounts are they? Asset How is each account balanced changed? Cash Decreases Supplies increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Paid Cash for supplies 1,577 Cash Supplies Debit Credit Debit Credit Normal Bal... Normal Bal.... + - + - 1,577 1,577 So we say for this transaction we Credit cash, Debit Supplies
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1. Paid cash for Insurance
What two accounts does it effect? Cash Prepaid Insurance What types of accounts are they? Asset How is each account balanced changed? Prepaid Insurance Cash Decreases increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Paid Cash for Insurance Cash Prepaid Insurance Debit Credit Debit Credit Normal Bal.. Normal Bal.. + - + - 1200 1200 So we say for this transaction we Credit cash, Debit PPI
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Bought supplies on account from Butler Cleaning Supplies
2,720 What two accounts does it effect? Supplies Butler Cleaning Supplies What types of accounts are they? Asset Liability How is each account balanced changed? Butler Cleaning Supplies Supplies Increase increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Bought supplies on account Supplies Butler Cleaning Supplies Debit Credit Debit Credit Normal Bal.. Normal Bal.. + - - + 2,270 2,270 So we say for this transaction we Debit supplies, Credit Butler Cleaning Sup
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Paid cash on account to Butler Cleaning Supplies 1,360
What two accounts does it effect? Cash Butler Cleaning Supplies What types of accounts are they? Asset Liability How is each account balanced changed? Cash Decreases Butler Cleaning Supply decreases How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Paid Cash on Account Cash Butler Cleaning Supply Debit Credit Debit Credit Normal Bal.. Normal Bal.. + - - + 1360 1360 So we say for this transaction we Credit cash, Debit Butler cleaning supplies
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Please work on “Work together and On Your own” on page 50
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Assets = Liabilities + Owners Equity
Left Side Right Side Left Side Right Side Debit Credit Normal Bal.. Debit Credit - + Revenue Normal Bal.. + - Left Side Right Side Cash Supplies Prepaid Insurance Debit Credit Normal Bal.. - + Expense Left Side Right Side Debit Credit Normal Bal.. + -
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Received Cash from Sales $525
What two accounts does it effect? Cash Sales What types of accounts are they? Asset Revenue How is each account balanced changed? Cash Increases Sales Increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Received Cash from Sales Cash Sales Debit Credit Debit Credit Normal Bal.. Normal Bal.. + - - + 525 525 So we say for this transaction we Debit Cash, Credit Sales
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Paid Cash for Rent 250 What two accounts does it effect? Cash Rent Expense What types of accounts are they? Asset Expense How is each account balanced changed? Cash Decreases Rent Expense Increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Paid cash for rent $250 Cash Rent Expense Debit Credit Debit Credit Normal Bal.. Normal Bal.. + - + - 250 250 So we say for this transaction we Credit Cash, Debit Rent Exp.
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Paid cash to owner for personal use $100
What two accounts does it effect? Cash Ben Furman, Drawing What types of accounts are they? Asset Drawing How is each account balanced changed? Ben Furman, Drawing Cash Decrease Increase How is each amount entered into the T- Accounts
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How is each amount entered into the T- Accounts
Paid cash to owner for personal Use $100 Cash Ben Furman, Drawing Debit Credit Debit Credit Normal Bal Normal Bal + - + - 100 100 So we say for this transaction we Credit Cash, Debit Drawing
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Page 58 Prob 3-1,2,3,4,5
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